What fluctuates under an FHA graduated payment mortgage?

In an FHA graduated payment mortgage, it is the monthly payments that fluctuate. This type of mortgage is designed to accommodate borrowers who expect their income to increase over time. Initially, the monthly payments are set lower than what they would be under a standard fixed-rate mortgage, allowing the borrower to manage their financial obligations more easily in the early years.

As the borrower’s income grows, the payment amounts gradually increase at predetermined intervals, hence the term "graduated." This structure aims to match the borrower’s increasing financial capabilities, making homeownership more accessible for those who may not have the financial stability for higher payments from the outset.

Other options, such as loan interest rates, property taxes, and insurance premiums, generally do not follow this fluctuating pattern. The interest rate on a fixed FHA mortgage remains constant throughout the life of the loan, while property taxes and insurance premiums can vary due to external factors rather than being part of a specifically designed payment structure like the graduated payment plan.